Chancellor Kwasi Kwarteng will today deliver the biggest package of tax cuts since Margaret Thatcher was in No 10 Downing Street.
The Bank of England said yesterday it believed that the economy had already gone into recession as it raised interest rates to 2.25%, the highest for 14 years.
Economists believe that interest rates could reach 5%, leading to significant rises in mortgage costs for millions of people. In his mini-budget this morning the chancellor will present 30 measures intended to drive economic growth.
These include reversing the rise in national insurance payments, freezing corporation tax and cutting stamp duty.
The chancellor confirmed yesterday that the 1.25% increase in National Insurance announced by Rishi Sunak would be reversed from November 6.
Ministers said it meant 28 million people would be £330 better off next year - and the policy reversal is a win for the Chamber network following months of lobbying.
Shevaun Haviland, Director General of the British Chambers of Commerce: “After months of campaigning, the Government announcement to reverse the increase to the National Insurance Contribution (NIC) is a big win for the British Chambers of Commerce and the business community. This is much needed support for businesses during these difficult times.
“There are a range of other challenges that must be addressed including labour shortages, supply chain disruption, and rising raw material costs. Today’s mini budget from the Chancellor is now a critical moment. To truly revitalise our economy for the difficult months ahead then tomorrow must bring a clear long-term plan that gives business the confidence to grow.”
The Telegraph says Mr Kwarteng is expected to follow with more tax cuts in his mini-Budget statement.
The Institute for Fiscal Studies said the package would represent the biggest tax cuts since Nigel Lawson’s budget in 1988. A Whitehall source said the combined cost could hit £50billion.
Economists said that the Bank of England and the government appeared to be “pulling in different directions”, with the Bank attempting to slow economic growth to tackle inflation and Liz Truss trying to speed it up.
Combined with extra spending, including more than £100billion to hold down energy bills, the cuts put the Government on track for years of heavy borrowing.